A week’s a long time in spreads, James Moore, Business Times
January 7, 2006admin
All of a sudden politics has become interesting again. As if the election of the youthful David Cameron as Tory leader were not enough, Charles Kennedy has admitted to a drink problem and called a Liberal Democrat leadership contest.
On the same day Tony Blair said he planned to be Prime Minister for a good few years yet, and would only hand over just before the next election.
All this has had a significant impact on the political spreads offered by Cantor Index on the number of seats each party will win at the next election. Prior to Mr Cameron’s election the spread showed Labour at 307-312.5 seats, the Conservatives at 248-250 and the Lib Dems 59-62.
Cameron’s election, however, sparked a rush of money for the Tories forcing the spreads upwards. Prior to yesterday’s announcement from Mr Kennedy the spreads were Labour 297-303, Tories 258-263 and the Lib Dems 54-56.
Today the spreads are Labour 290-296, Tories, 266-274 and the Lib Dems a poor value 51-56. The only conclusion to be drawn from this is that political spread betting should be treated in a similar manner to spread betting on financial markets.
Like any spread bet, profits can be taken, or losses crystalised, as the spread moves. Political spread betting is a classic trading market and when taking a position out on any of the three parties follow the news and take profits if and when you make them.
The current spreads suggest a hung Parliament with Labour (probably under Gordon Brown) taking the most seats. However, it’s a hackneyed cliche but a week is a very long time in politics – and spreads.
The fixed odds betting also tells an interesting story, with punters using the betting exchange Betfair having a markedly different opinion to traditional bookmakers. Betfair allows one to either back one of the parties to win the most seats, or act as a bookie by taking (laying) other people’s bets.
Punters on Betfair make Labour only a slight 9-10 favourite to take the most seats in the next general election with the Tories at 11-10. The price has been gradually coming in ever since David Cameron became leader.
Of the regular bookies, however, Stan James offers a best price 11-8 on the Tories to win the most seats. This means punters can back them with the bookie and take other people’s bets by “laying” on Betfair.
This strategy gives you a free bet on the Conservatives, but the margin is very slim. Labour is a best price 8-13 with Blue Square, suggesting the bookies are more confident about Labour’s chances than punters who use betting exchanges. It will be a few years before we find out who is right.
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